So, What's Next?

Sorry that I've been MIA most of the day. I've been spending a lot of time in thought, trying to decipher where we are going from here. This evening gold has charged through $1900 and silver has spent some time above $44. I feel I've got a decent handle on where we're headed, so, let's get started.

Let's begin with gold. It's moving almost straight UP and that is the type of momentum that is certain to garner the attention of our friends at the C/C/C. Many thought they were going to raise margins Friday. The specter of a margin hike kept gold in check all day near 1850. When Friday evening came and went without a hike, gold rallied today to make up for lost time. Since this afternoon has also failed to provide any emails from the C/C/C, gold is rolling again at present. However, don't be fooled. A margin hike is coming and the C/C/C will, undoubtedly, attempt to time it in order to get the biggest "bang" for their manipulative "buck". What better time than later this week?

Recall for a moment the pain and suffering from the late April and early May silver fiasco. The Forces of Darkness stood down and let silver run to a speculative "all-in" peak of almost $50...the psychologically significant, I might add, $50 level. Once everyone was sufficiently sucked in, the C/C/C dropped the hammer with 5 margin hikes in 9 days. As we all know, silver fell over 30% in the coming weeks.

Fast forward to present day gold. The C/C/C has already lobbed in one margin hike, just like they did in silver on Monday, April 25. They now appear to be letting gold run in order to, once again, suck in a lot of weak-handed, latecomers. And, just like silver in April, we are approaching an uber-significant psychological level...$2000. So, here's what I think happens next:

1) Gold, which is currently trading at $1912 as I type, is going to be allowed to run a little bit farther. It may slow a bit at Santa's next angel of $1936 but I think it may make it almost all the way to $2000. Maybe as soon as Wednesday or Thursday.

2) Then, the criminal C/C/C drops the hammer with a significant margin hike.

3) Gold sells off after the margin hike but hangs in there with a few speculators hoping and praying that The Fed will rescue them by announcing some new, dramatic quantitative easing program over the weekend.

4) The Fed "disappoints". No new overt QE. Instead, something like what is described in the link below will begin taking place behind the scenes. Still horribly inflationary but obscure enough to confuse the easily confusable.

5) Gold sinks like a stone next week, conveniently taking silver with it for a while.

You know that I like empirical data and patterns to buttress my opinions. These two charts do the trick:

So, the next question is, what happens to silver? In the very short term, silver looks great. In fact, now that we've eclipsed 44, I think it could soon trade as high as 46. However, keep in mind that September options expire on Thursday. The EE will likely be forced to retreat from their positions around 44 but they will certainly regroup at a higher level. Look for some resistance near 45. IF silver can get through there, it should have a very hard time dealing with 46. So, I expect a peak there, either at 45 or 46, before the EE caps things once and for all ahead of option expiry. IF I'm right about the coming gold beatdown, silver will be taken along for the ride next week. I would not be surprised to see it pull all the way back to 42 before basing and beginning its final assault on the highs from April near $50. Keep in mind that, by attacking gold, the C/C/C is unwittingly shifting the leverage picture back in favor of silver. Maybe not fully in favor of silver but at least they'd be leveling the playing field. In Q4, this will have the effect of driving more speculative longs back into silver and consequently give silver the juice to finally eclipse $50.

So, there you have it. Jeezo pete, I must be some kind of masochist. I finally put $44 silver to bed and I jump right back into the fire by trying to predict the future again. Oh well. My buddy "Turdle" told me when I started this nonsense back in November that my real value was always going to be in "calling it like I see it" and not "pulling punches". Well, there you go. No punches pulled on that one. Now, keep in mind two things:

1) I could be wrong.

2) If you're ready to get out and sell your trading positions now, then do it. Don't wait around for the final uptick. Remember, "pigs get slaughtered".

That's all for now. Stay nimble and enjoy the fireworks. Thanks for being a part of this growing "community". TF

8:40 am EDT UPDATE:

As I rubbed the sleep from my eyes an hour ago, my first thoughts were of despair. After some coffee and some consciousness, I feel better. Gold is only down about $10 from where it was when I went to bed and silver is only off 30c. Big deal. In fact, the only thing we've seen is a continuation of the pattern we identified yesterday at this time. Gold sells off at 3:00 am EDT and begins to rally back at around 9:00 or 10:00 am. Here's a reprint of the chart from yesterday morning:

And now, here's an updated hourly and a 3-minute chart that shows the raid commencing at exactly 3:00. (Like Mussolini, the Wicked Witch may be ruthless but at least she makes the trains run on time!)

Predictably, silver was dragged along for the ride. However, it has once again held what is now support near 42.50. It has since rebounded back above $43.

409 Comments

Talked to a guy at Miles Franklin today who told me he is hearing bullion banks are the ones buying tons of gold who are driving up the price. I said "what do you think of the prospect of margin hikes". His take was that bullion banks accumulating gold are not buying contracts on margin to make fiat. They buy to hold the gold. So margin hikes will do little to quell the precipitous rise, maybe momentarily. But it's not like silver that was speculated up quickly. People buying the amount of gold driving it up like that are paying cash and getting phyzz.

I don't know about your analysis Turd. The stimulus is spent, and QE2 is over, and the economy is still in the tank. You can hear the doom and gloom every night, but are things that much worse than 2008, or are we just bumping along the bottom? I think they are playing up the terrible conditions to ram another stimulus through congress and they'll, to an extent, allow the PMs to run just to reinforce the feeling of impending doom. I don't think we'll see any major moves against the PMs till congress gives them what they want.

check out this chart. I did it up on Netdania w/ Gold and the overlay of silver on the weekly chart w/ my lines drawn in. The candles are gold, the blue line is silver. The lines I've drawn on one bottom long-term, then July 2010 through January 2011. Then January 2011 through June 2011. Each about 6 month increments. You can see the "slices" as they have risen upwards. That's no biggee...we've been looking at those lines since July and seeing the upward trend channel as I have drawn in the top line as well.

But look at the similarities of the gold chart w/ the silver chart as it's compared to silver back in April when it made it's run up to 49. Identical. I know it's 2 different PM's and 2 different prices basically and all that. But what I'm seeing is that gold is being "allowed???" to jump up just like silver was "allowed???" to jump up in April.

And we all remember what happened in April as silver almost hit 50...boom...major beat-down!

So I'm just wondering if the EE is allowing gold to run up towards a psychological number of 2000 just so that they can do what they did to silver in May and boom! Rip the rug right out from under everybody and knock gold back down 200, 300, or 400 Bernankies. Taking silver right along with it. Like a Reverse Zabida when you didn't see it coming.

I mean, I think we all know it's bound to happen eventually, right? They still have to keep doing what they do or it's game over.

So does this look like the makings of an imminent beat-down to any of you???

I don't care either way, because I'm only phyzz...As phyzz stackers we should love to see a major beat down in both PM's again so that we can back up the truck and load up as usual.

But if I did trade the paper and was seeing this...especially after what happened to silver in May, I sure wouldn't want to take too many risks as gold closes in on 2000.

@DFCtomm Congress has nothing to do with whether the Fed embarks on QE3 or some other fiasco. There is no congressional oversight, a oxymoron if ever there was one, and short of impeaching BB, and hold not your breath, Congress just waits around and provides sound bites - along with the usual unlimited supply of arrogance, corruption and stupidity.

I realize that the FED is probably going to use more stealthy methods of QE this time around, but I am thinking of say a 1.5 trillion stimulus bill, since the last one was obviously too small. It was difficult to ram it through, and with the tea party reps it will be even harder this time, so they are going to have to gin up the fear to get the big push. It's going to happen since they need the economy to turn around for the 2012 elections.

I'm just wondering if I am starting to see what you're seeing...I posted a chart w/ a write-up before your latest post, and they are very similar. Am I starting to "get it"? Do I ever have a chance of seeing things the same way you do? I look and I look, but usually I never post any of my own so-called "analysis" because I'm totally not worthy of trying compared to you and most others on here.

But tonight I tried to post something I thought I saw, and crazy enough, it's somewhat similar to what you just posted.

As I asked at the end of my post, "any thoughts"? I was wondering if I was on to something. Hope I was...just looking for a little vindication for all the studying I've been trying to do since starting with all of this over the last 9 months or so.

I do sense a beat-down, but maybe at this point after what we've all seen, even Stevie Wonder could SEE it coming so I'm no different! LOL

Yeah, I agree. I've been waiting for it for a few days now. I prefer to sit back and take pot shots at BankO'Merica until the stampede dies down. I figure they will get a 'get out of jail free' card towards the end of the week, around the same time that we begin basing in PM's. I am ready to get more Phyz.

I visited my local coin shops today, and both of them said that they were getting no more deliveries of Silver Eagles from their suppliers. They were told, by their wholesalers, that the Mint was out. I know that the mint had issues with getting blanks to make them a while ago, but now? Both of them were reporting very good sales of what they had, 1,5, 10 oz bars, junk and misc 1 oz coins.

what's the trump card here? This action in PM is a consequence of all the financial economic problems which are growing like a cancer. ie--what's up with the GS lawyering up?

What about the law of supply and demand. It sure as hell looks like supply is declining while demand is increasing.

If I think the SHTF I only care about ounces, not prices. And it sounds like we are getting close to TSHTF. Yes, if margin hikes come there will be some sort of sell off.

In my paper portfolio I am long long PM in all forms-but during a run up like this I buy puts on GDX GLD and SLV. IF AGQ and UGL options were a bit more liquid I would play those puts.

I want to be long long because I figure we wake up one day and see gold and or silver do a 20-30% sudden move up. So I figure I can afford the cost of insurance (and some piece of mind). But you try to pick and choose when to insure.

Back to trump card and cause and effect. When the margin hikes come--which will be a stronger force--France going on watch list or margin hike. BAC exposed, or margin hike. There are a lot of cross currents occuring. A series of margin hikes are temporary -th eother problems not so temporary. Therefore puts can make you some trading profits.

and if you time it right, just send EE or C/C/C a thank you note as you scalp profits and keep your long positions intact.

yeah...I saw (and appreciate) your reply from the last thread on that. I copied it over from the previous thread only because what I was trying to put together ( in my own rookie way) all of a sudden seemed to be very similar to what Turd posted on this new thread.

I wasn't sure of what I was seeing and I stated that. But even though my chart might not be something that can be correlated perfectly between silver and gold, I think what I was seeing helped me interpret and write a theory that turned out to be very similar to what Turd ended up posting.

Hey, I don't profess to know jack crap for sure! lol I'm just trying to learn and see what Turd and all the other greats that we read and learn from see and interpret.

So, basically after seeing what Turd just posted, I think my theory is right, even though I think I just stumbled on it by hard work and dumb luck.

Gold is about to get a beat-down right about near 2000 and silver will be taken down with it.

I wish I would have seen that earlier today, because maybe the gold coin I bought today would be cheaper in the next few to several days, but that's ok...I'm still happy with my purchase from earlier today.

But when this beat-down occurs, I hope all the Turdites back up the trucks and load up on the phyzz, cuz it'll be the next best opportunity to BTFD!!!

For sure margins will be hiked, as with silver, by the EE. Buying phyzz or paper is all about protection. A few puts, at these levels, is not a bad idea. I have some end of the year calls on GLD and SLV. Last week sold some to take my principle out of the market. Will hold the balance until Sept/Dec/Jan, as the case maybe. Buying puts now, what is the worst to happen. You make $ on the run up I. The phyzz and your puts go to zero? I will take that. Or you cover some of your paper loses with an increasing put price. Oh, the pain is not so bad.

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